The Federal Reserve is, at last, acknowledging at top levels and in fairly clear language that its economists are completely baffled, its recovery is failing, that the Fed cannot raise interest and may even have to heat up its stimulants, or we may end up with a permanently scarred and stagnant economy.

Federal Reserve bank president expresses deep reservations about Fed’s recovery

Last week, Boston Federal Reserve President Eric Rosengren opened a meeting with Fed Chair Janet Yellen with the following statements:

He said the “nonconformist” behavior of the economy remains a challenge for policymakers trying to determine whether low growth and low inflation are now a permanent state of affairs…. It could mean the country’s economic performance has changed for good. Policymakers are trying to determine “whether firms and households have changed behavior in ways that are likely to be more permanent than transitory, whether slow growth in productivity is transitory or permanent, and whether recent trends in personal saving behavior are likely to persist well into the future,” Rosengren said. The answers will shape whether officials at the Fed and other central banks … will have to keep nontraditional tools in hand and be prepared “to address any emerging risks to the current recovery.” The fact that 10 year Treasury yields remain near or below zero on an inflation-adjusted basis, Rosengren said, “suggests a lack of confidence in U.S. and global growth prospects, and in the ability of policy authorities to offset weak growth.” (Newsmax)

Really? You figured that out all by yourselves? Good job, guys. Yes, there is a great lack of confidence in your ability to do just about anything. Yes, your plan has created an economy that is destined to remain stagnant until it dies. Yes, the economy is “non-conformist” to regular economic because you have engineered a recovery that is entirely based on irregular ways of thinking and have all but eliminated free market sin anything that trades in this world with your infinite ability to create meaningless money to pump into those markets. Therefore, the market of everything follows the Fed, rather than conforming to normal economically based decisions, because the Fed IS the economy now.

And all of this is a “challenge” for you because you haven’t got a clue as to what genie it is you let out of the bottle. And, yes, it does mean the country’s economic performance has changed for good or, at least, until your experiment in alchemy blows up so we can get back to real economics. Until then, the economy is destined to endless life support in order to remain alive but comatose on the operating table.

We’re all glad you’re finally starting to see the shape of things to come. You are worse than the old-world alchemists who tried to make gold out of baser metals. You try to make money out of nothing and pretend it has value, even as you create near-infinite amounts (trillions of dollars) of it. And, then, you believe the nothing you have puffed up with your hot air can create productivity and wealth throughout the nation.

Clearly, your centrally planned economy is not running quite as you well as you would like or as you puppets of mastermind Ben Break-the-Banky thought it would, or you wouldn’t be talking about how it is not conforming to the responses you thought you’d get from all of your quantitative wheezing and free loans. Once you finish figuring out why your plans aren’t working, if you need any arsenic for yourselves, I’m sure you can find plenty of people who will help you get ahold of some.

Yellen not yellin’ “recovery” any more

Next, the comments of Fed Chair Janet Yellen proved equally enlightening as to how economically unenlightened the Fed actually is:

Federal Reserve Chair Janet Yellen said Friday that the slow recovery from the Great Recession has surprised economists, confounding long-held beliefs about growth and inflation. Her remarks could help explain why the Fed has been reluctant to raise U.S. interest rates. (Newsmax)

How odd that you would be surprised by this, Janet, given that I started writing this blog years ago because I was certain your recovery would fail and that any real recovery from the disaster that was created by the Federal Reserve, which we call the Great Recession, would take decades, not years.

You are surprised because you religiously hold beliefs about growth and inflation that are completely oblivious to how free-market economies actually function. Because of this false belief system, the Fed and its modern economists completely failed to see the great abyss that was coming in 2007 and 2008. To this day, completely fail to see that we are still standing in it. It was your mentor who sat in your chair, Ms. Yellen who infamously said he didn’t see a recession in sight during the summer of 2008 when he was standing nose-deep in the middle of one.

So, are we surprised your surprised. No. Readers of blogs like this expect you to be. Being surprised by real-world economic reality seems to be what you do best. I’m sure you thought you could nudge interest rates off the bottom in December 2015 without destroying the stock market that you court and the economy as a whole and were surprised when the market immediately plunged into its worst January in market history. I’m sure you were surprised that things looked so bad by February that you had to hold two closed-door emergency meetings with your board of governors right after one of your regular meetings and then follow that with an emergency meeting with the president and vice president, also behind closed doors in order to try to fix the problems that were suddenly showing up quite starkly. I suspect you were surprised when you could not raise interest rates four times this year as you telegraphed you might do … and then couldn’t raise them three times … and then couldn’t raise them twice … and now appear to be preparing the way in your comments below for the possibility that you won’t be able to raise them even once this year.